LaHood's proposal also would let passengers cancel reservations within 24 hours of booking a flight without penalty, require carriers to refund baggage fees when luggage is delivered late and bar price increases after tickets are purchased. The rules will take effect by the fall after a comment period, LaHood said.

The planned regulation would adjust the bumping amount for inflation every two years.

In April, a rule went into effect that imposed high fines when airlines fail to let passengers off plans stuck on tarmacs for three hours.

After two down years, the Air Transport Association projects air travel will be up this summer, about 1 percent. But stronger travel demand may run smack dab into a smaller airline industry, as Jeff Horwich reports.

About the author

Daryl Paranada is the associate web producer for Marketplace overseeing all daily website content and production, as well as producing multimedia features -- including the popular economic explainer series Whiteboard -- and special projects. Follow him on Twitter @darylparanada.